News Highlights Thursday 27 March 2008

Rising tide of foreigners snapping up S’pore property
More foreigners are parking their funds in private property here, especially in the Core Central Region (CCR). Singaporeans are buying more property too but in relative terms, their share is dwindling because of the foreign influx. According to Jones Lang LaSalle, Singaporeans’ share in the purchases of private apartments and condo units here drop from 77% in 2000 to 63% in 2007; Foreigners (including permanent residents) share increased from 16% to 29% over the same period. Market watchers expect the trend to continue in the long-term. JJL’s study shows foreign buyers presence was most dominant in the CCR. The percentages of foreign buyers in 2007 by regions are CCR 26%, Rest Central 15%, Outside Central 8%. Islandwide 15%.

- The Business Times, P1



Changing home investment scene
Continual government efforts to attract foreign investments and immigration-friendly policies to support long-term economic growth will benefit the residential market. Foreign purchasers are increasingly becoming more diversified. Another rising trend is residential investments made by property funds and financial institutions since 2003. Out of the total $2.6 billion worth of non-landed residential developments, 42% was transacted by these funds. Institutional investors remain optimistic about the upside potential of the Singapore residential market. Many of these investors are looking at total return rather than just income yield. Singapore continues to attract a global pool of investors and talent and incoming talent will put demand on the housing market. These developments have collectively positioned Singapore high on the list of many global investors.

- The Business Times, Property P18



HDB resale buzz set to continue
The HDB Resale Price Index (RPI) rose 6.6% in the 3rd quarter and 5.7% in Q4, after 1.3% and 3% increases for the first and second quarters. The HDB resale market is expected to continue in 2008, but with the increased number of new flats coming on stream, some demand will be taken away from the resale market. Resale prices are expected to continue to rise, but more possibly at a more measured pace of 5-8% in the coming months due to increasing buyer resistance and more new supply coming on stream.

- The Business Times, Property P20



Home prices surpass 1996 levels
In the last 2 years, the URA price index showed that the prices of landed homes rose by 32% while those of non-landed homes rose by 47%. However, within the non-landed segment, prices of uncompleted homes grew by 53% whereas those of completed homes (existing stock, resale transactions) rose 45%. Based on URA prices indices by region for uncompleted non-landed properties, the Core Central Region took the lead with a 67% growth followed by the Rest of Central Region with a 41% growth and the Outside Central Region with a 35% growth. Luxury prices would remain firm, mid-market homes would be expected to rise by 5-10% while mass market home prices could grow by 10-15% in 2008.

- The Business Times, Property P8



Prices and rentals of landed homes set to rise
Landed homes saw their strongest price rise last year since 1994 but they have yet to catch up with their non-landed counterparts, leaving room for more capital as well as rental growth in 2008. Prices of landed rental homes rose 23.4% last year, going by the URA index of landed private residential property island-wide. The landed housing market should be able to attain capital gains of 10-20% this year. Singapore’s property market remains fundamentally sound, backed by robust job market and an expanding economy.

- The Business Times, Property P9



A time for reflection and planning
After two years of exuberant growth, property launches and sales have slowed as local buyers adopt a wait-and-see attitude while foreign buyers are taking a similar approach in the wake of the sub-prime crisis. However, prices have not weakened and industry players say the fundamentals of the local property market are still intact. These days, developers reckon they can hold off new property launches, for some months at least. The strategy is that if they don’t launch projects, they don’t need to drop prices to entice buyers. Singapore property investment sales this year are expected to come in about half of last year’s record $54.5 billion, CBRE estimates.

- The Business Times, Property P3



Wait-and-see stand in property plays
Hong Kong and Singapore are still attractive despite higher prices and rentals because of their more developed infrastructure and connectivity. The fundamentals supporting the Singapore property market are strong, with low interest rates ad many exciting events and economic investments coming on stream. However, many property investors and developers are adopting a wait-and-see stance. Developers in Singapore are holding back launches and some funds are holding off making investments at least for the first half of 2008.

- The Business Times, Property P20



Luxury home prices to fall 32% by 2010: Nomura
While real estate consultancy such as CBRE and Savills remain positive about the Singapore property market, Nomura Research expects luxury home prices to slide by 32.3% from their 2007 peak between now and 2010. Average prices in the luxury segment will fall 16.9% in 2008, 10.3% in 2009 and 9.3% in 2010 as rental growth slows and yields are reappraised. Nomura analysts said asset prices are being driven lower by marginal speculative sellers, low transaction volumes and higher unsold pre-sale inventories. It projects a major correction – with a 2010 average price of $1,847 psf. The advent of new supply and the resultant increase in rental availability in prime locations is likely to see demand that was once displaced to “non-core mass market” locations returning to prime districts, hurting non-core rents and ultimately mass market prices. As a result, mass residential prices will remain flat in 2008.

- The Business Times, P37



En bloc: Importance of being earnest
The dissenting voices of the minorities in many en bloc projects created the impression that the en bloc laws needed an overhaul. Recognizing this and balancing various views, the government introduced a new set of laws in October last year that raised the standards on governance and disclosure. The new laws increase costs for en bloc sellers and makes the exercise more long drawn out. By this time last year, 25 deals had taken place. So far this year, only one small deal has been reported. When the sub-prime cloud clears, demand for land from developers should pick up and en bloc sales will be back on track. Activity in this round is unlikely to mirror 2007, as it would be taking off from a higher price base.

- The Business Times, Property P4



Curtin Uni to set up campus here
The Curtin University of Technology will refurbish the former Institute of Education campus in Jalan Rajah, Balestier, and start undergraduate courses in November. The university will station a pro vice-chancellor from the university to do the job here. Curtin will be financed $40 million by global education services company Navitas, which is listed on the Australian stock exchange. Executive director of Navitas is confident that the university will attract students from around the region, such as India, China, Vietnam and Thailand.

- The Straits Times, H3



Temasek not aware of plans to sell Surbana
Temasek Holdings said that it is not aware of plans to sell its subsidiary Surbana, a firm that has built townships overseas. Surbana’s chairman was quoted in Lianhe Zaobao, yesterday on “plans” to sell Surbana, once part of the HDB. He said that if Temasek decides to sell Surbana, it could sell the unit to a property developer that is similar in scale to CapitaLand or it could take Surbana public via an initial public offering. The chairman also said that Surbana has lots of potential and can be developed up to 10 times its current size. The firm is already operating in 73 cities in 18 countries.

- The Straits Times, H20



Fund tops Serangoon site tender with $801m bid
A fund bid for $800.9 million for a 99-year leasehold land site, which will be used for a mall and a new bus interchange. The highest bid came from Pramerica Real Estate Investors (Asia). It reflects a price of $850 psf of gross floor area. The site – launched by the Land Transport Authority – is destined to be a hub with Serangoon MRT serving as a junction station for the new Circle Line. Any development must include a new bus interchange integrated with the enlarged North-East and Circle Line stations. The plot is designated a white site, meaning it could be used for different functions, but a full retail mall would bring the highest profit margin. The site has a gross floor area of 87,527 sq m.

- The Straits Times, H21



Pramerica makes $800m top bid for Serangoon site
The group is planning a full retail development on the site and that its breakeven cost would be slightly below $2,000 psf of net lettable area. Analysts reckon that Pramerica Asia’s total investment in the development would be around $1.3 billion. The plot is expected to be developed into a mall with a net lettable area of about 650,000 sq ft. According to CBRE, the proposed mall will not only tap into the existing traffic from Serangoon, Ang Mo Kio, Hougang and Sengkang, but will also be a magnet for shoppers living beyond these areas. Separately, the Urban Redevelopment Authority yesterday made available for application two 99-year leasehold reserve list sites – a hotel plot at the corner of Clemenceau Avenue and Havelock Road, and a private condo site at Upper Changi Road North/Flora Drive. The Upper Changi plot is expected to fetch about $180-250 psf ppr.

- The Busienss Times, P3



Church puts up Telok Kurau site for tender sale
The Presbyterian Church in Singapore has put up for sale a large 9,445 sq m site in the Telok Kurau area. CB Richard Ellis has been appointed marketing agent for the site which is at 116 Lorong J, Telok Kurau and 119 Lorong K, Telok Kurau. The URA has granted an Outline Permission for the construction of a five-storey condominium development with a plot ratio of 1.4. Developers have the option to purchase the site with a leasehold tenure of 105 years or 999 years commencing Jan 26, 1939. CBRE pegged the guide price at $40 million for about $607 psf ppr. Development charge is estimated at $46.44 million for a condominium development. For a condominium development, the developer can build 118 units assuming an average size of 1,200 sq ft each.

- The Business Times, P36